TRAI proposals on media ownership

The recommendations cover a comprehensive definition for control; cross-media ownership; vertical integration; and internal plurality

BestMediaInfo Bureau | Delhi | August 13, 2014

The Telecom Regulatory Authority (TRAI) has released the recommendations on issues relating to media ownership. The recommendations cover a comprehensive definition for control, cross-media ownership, vertical integration, and internal plurality.

The telecom regulator said it was time for India to impose cross-media restrictions, following the lead in countries like the US and the UK, in order to ensure “a number of independently owned media voices in the market”. It added that “India is influenced to a large extent by a few major players who have the ability to significantly influence public opinion. In the Indian context, it is vital to consider both the number of voices in the market as well as their influence in order to ensure competition at the horizontal level.”

TRAI has restricted the cross-media ownership rules only to the news and current affairs genre, including business and financial news. It felt that these restrictions should apply to television channels and the print media, contending that radio and internet should be left out of the ambit of these rules.

“Once private radio channels are allowed to air news generated on their own and become significant in the relevant market, a review of the cross-media ownership rules should be undertaken,” the report said.

It recommended restricting the geographic market for cross-media restrictions to 12 languages and 20 states: Assamese and Assam, Bengali and West Bengal, Gujarati and Gujarat, Kannada and Karnataka, Punjabi and Punjab, Odia and Odisha, Malayalam and Kerala, Marathi and Maharashtra, Tamil and Tamil Nadu, Telugu and Andhra Pradesh, Hindi and Bihar, Chhattisgarh, Delhi, Haryana, Himachal Pradesh, Jharkhand, Madhya Pradesh, Rajasthan, Uttarakhand, Uttar Pradesh, and English which was pan-India.

“Cross-media ownership rules would restrict ownership within a relevant market, i.e., between the newspaper and television outlets, and not across different relevant markets. The rules would specify how entities in the Bengali newspaper market in West Bengal can/cannot control entities in the Bengali television new channel market in West Bengal and vice versa,” the report added.

The regulator suggested a mix of reach and volume of consumption metrics to compute market shares for the television segment. “For the print segment, using only the reach segment is sufficient,” it said.

In the case of the television segment, it suggested that the gross rating points (GRP) of the channel should be compared with the sum of the GRPs of all the channels in the relevant market.

In the print segment, the market share of a newspaper would be the circulation of that newspaper compared with the combined circulation of all newspapers in the relevant market.

The regulator picked the Herfindahl Hirschman Index (HHI), which is the sum of the market shares of all entities in a relevant market, as the best measure of concentration in a given market.

If television as well as newspaper markets are concentrated (where the HHI is greater than 1,800), then an entity contributing to more than 1,000 to the HHI in the television market cannot contribute more than 1,000 towards HHI in the newspaper market.

“If it does so, it will have to dilute its control in one of the two segments. This rule applies only if the HHI thresholds are violated consecutively for two years,” TRAI said.

It recommended that the cross-media ownership rules should be reviewed three years after the announcement of the rules by the licensor and once every three years thereafter.

Existing media entities that are in breach of the rules should be given a maximum of one year to comply, TRAI said.

Mergers and acquisitions in the media space should be allowed only if the HHI threshold isn't violated.

TRAI also recommends guidelines for paid news and said there was a need to impose penalties for “paid news” and private treaties.

Private treaties are agreements between a media company and a non-media entity in which the latter transfers shares of the company to the former in lieu of advertisements, space and favourable coverage.

The regulator has suggested that media organisations should submit reports to the licence-issuing authority and the proposed regulator disclosing information related to the shareholding pattern, foreign investments, board of directors and loans.

TRAI said media organisations must also disclose to the licensor and the regulator and their top 10 advertisers, subscription and advertisement revenues and advertising rates. The government should not regulate the media. There should be a single regulatory authority for TV and print mediums; the regulatory body should consist of eminent persons from different walks of life, including the media. It should be manned predominantly by eminent non-media persons.

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